Apple has been adjusting its OEM operating model from OEMs being responsible for both component procurement and production, to purely production, according to Taiwan-based OEMs.
The new strategy is expected to impact Taiwan OEMs’ profitability in the long term since some of their profits are generated from their cooperation with upstream suppliers, the sources noted.
Since more suppliers are becoming capable of supplying components for Apple’s products, the US-based vendor has recently started adjusting its upstream partners in order to preserve more profits for its products.
Apple has also agreed to let its OEMs raise quotes to maintain their gross margins, and the plan is expected to increase OEMs’ profits by 3-5%.
However such a change is expected to relieve OEMs from bearing component inventories and reducing their pressure.